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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- 7, Mumbai for the A.Y.2008-09 in the matter of order passed u/s.143(3) of the IT Act. 2. First grievance of assessee relates to disallowance of Rs.12,86,148/- u/s.14A. 3. Rival contentions have been heard and record perused. During the course of scrutiny assessment, AO has made a disallowance u/s.14A r.w.Rule 8D amounting to Rs.12,86,148/-.
M/s. Syntex Corporation Pvt. Ltd., 4. By the impugned order, CIT(A) confirmed the action of the AO and assessee is in further appeal before us. It was argued by learned AR that while computing disallowance only those investments should be considered which have yielded exempt income. The issue under consideration is squarely covered by the decision of the ITAT Special Bench in case of Vireet Investments order dated 26/06/2017, wherein it was held that only those investments should be considered for computing average value of investment which yielded exempt income during the year. Respectfully following the same, we direct the AO to recompute the disallowance by excluding the investment on which assessee did not yield any exempt income. We direct accordingly.
Next grievance of assessee relates to addition of Rs.12,86,148/- as computed by the AO u/s. 14A, while computing book profit u/s.115JB. This issue is also covered by the decision of Vireet Investment (supra) wherein it was held that only the expenditure debited in the P & L account relating to exempt income should be considered and not the disallowance worked out by AO. It was held by Special Bench that computation under clause F of explanation 1 to Section 115JB(2) has to be made without resorting to the computation contemplated u/s.14A r.w.Rule 8D of the Income Tax Act 1961. Respectfully following the decision of the Special Bench, we do not find any merit in the action of the AO for adding the disallowance computed u/s.14A, while computing book profit u/s.115JB.